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Archive for January, 2011

Innovate and simplify

Submitted by Paul Maurer on Monday, 01/31/2011 - 10:31

As business travelers helped fuel record annual profits last year at all major domestic carriers, save for American Airlines, one can’t help but wonder if business travel is in for better times. After all, 2010 was dubbed the “Year of the angry traveler” so conditions have to get better, right?

Unfortunately, the commercial airline industry doesn’t appear to be planning to make life any easier in 2011. On top of security hassles and more ancillary fees (if you’re interested, here are predictions for 11 new ones), most are planning to keep a close eye on capacity, restricting flight times and limiting alternatives for stranded travelers. In fact, there’s been particularly strong local resistance to Southwest‘s and Delta‘s short haul cuts, the ones most attractive for work related day trips.

Along with these trends, industry consolidation and rising gas prices practically guarantee that higher fares are ahead. When airlines say they’re raising prices, however, they’re generally talking about an average increase of $10-$20 each way. While news like this certainly can get corporate travel managers in a tizzy, they hardly send business travelers scrambling to comparison shop for $100,000 jet cards (an entry level product).

So how can business aviation vendors capitalize on these continuing trends? Innovate, sell against the cost of wasted time and simplify the travel buying process. These strategies appear to be working for companies like XOJet, whose fixed point-to-point charter pricing keyed 50% growth in 2010, and JetSuite with their all inclusive hourly rates for charter. Meanwhile, lower cost alternatives continue to attract greater numbers of fliers: ARGUS ‘ year over year results indicate the turbo-prop fractional group (a relatively lower cost business aviation alternative) led growth; while Embraer’s Phenom 100 light jet led the entire industry in unit sales in 2010.

With excess capacity persisting in the industry, business aviation seekers will find aggressive pricing. However, it will be the Innovative business aviation companies that will figure out how to leverage new strategies and current industry conditions to gain market share.

(Excerpted from the January, 2011, Igojet e-newsletter. To receive future e-newsletters directly to your Inbox, please click here and sign up)

Holiday green shoots

Submitted by Paul Maurer on Wednesday, 01/05/2011 - 05:10

Happy holidays! I hope you are enjoying a festive and relaxing week. Unfortunately, ‘festive’ and ‘relaxing’ are not words often associated with air travel this time of year. Increasingly invasive security measures, the holiday onslaught of leisure travelers, and unpredictable weather this time of year challenges even the most patient business travelers.

While travelers are increasingly resigning themselves to such hassles, they also seek ways to gain convenience and time savings. In fact, a recent Orbitz for Business survey revealed that top five most used airline ancillary services are all convenience and flexibility related, as opposed to baggage check related which usually garners most of the attention (and the $7.8B in 2009 ancillary revenue). Furthermore, there is continued pressure by business travel industry groups to reinstate a ‘trusted traveler’ program. They estimate that business travelers would take 2-3 more trips per year if hassles could be reduced.

The bright side of these airline travel hassles appears to be benefiting the business aviation industry. While November 2010 business flight activity was up a nominal 6.3% vs. last year, there have been anecdotal reports of a December surge in demand due to weather and airport chaos.

While holiday related upticks in business aviation demand is certainly positive (industry trade group NATA’s President stressed in his end of year message that “there’s nothing more important for general aviation than to increase flight activity”), high business aviation prices continue to be a major deterrent. Fortunately, there were a few developments this month that bode well for the future of lower priced alternatives.

The HondaJet completed its first official flight (though deliveries won’t start until 2012), JetSuite expanded its low cost Phenom 100 service to 4 Texas cities, and Executive AirShares launched an innovative simultaneous usage option for its fractional customers. As well, Eclipse Aerospace continues to show promising signs of a turn-around.

With air travel decisions, it’s typically a time saving vs. cost calculation. If a few December airline hassles (causing lengthened average trip time) can shift a little demand to business aviation, just think what a lower cost business aviation alternative could do.

(Excerpted from the December, 2010, igojet e-newsletter. To receive future e-newsletters directly to your Inbox, please click here and sign up)


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